Finland will invest EUR 16 million in small businesses that create jobs through Finn Church Aid’s (FCA) Investments Ltd, a new company established by FCA, said a government press release.
The investment will be made in the form of loan, and according to the terms and conditions, the loans will be paid back with interest to the State of Finland in 18 years.
At the initial stage, FCA Investments Ltd will invest in businesses in Asia and Africa through two separate funds. The company will also start making direct investments.
“The lack of moderately priced financing in developing countries is a key obstacle to setting up businesses that create jobs. The new company can support promising growth potential of businesses in cases where their activities are still too small-scale to interest traditional development finance companies,” said Minister for Foreign Trade and Development Anne-Mari Virolainen.
FCA Investments is planning to make direct investments of EUR 0.1-1 million. Traditional development finance companies seldom make investments that are under one million euros, because the administrative costs of small investments become too high in relation to the investment made.
Making small investments is worthwhile for FCA, because at the initial stage it will use other resources too to support the financing of businesses. It can support them, for example, in matters related to the management of finances, business planning, and marketing.
Compared to other similar actors, FCA Investments benefits from the fact that Finn Church Aid has staff on location and they have experience from countries in which investments will be made, said FCA Executive Director Jouni Hemberg.
FCA Investments is planning to make its first direct investments in Uganda in Eastern Africa. In addition to Uganda, FCA will probably make direct investments also in Somalia, Kenya, Jordan, Nepal, Myanmar and Cambodia. In some of these countries the operating environment is clearly more challenging than in Uganda.